tv Nightly Business Report PBS January 11, 2018 5:00pm-5:31pm PST
>> announcer: t "nightly busi hat trick. the three major indexes close at records as oil prices rise and investors grow increasingly optimi about earnings. payday. walmart, the nation's private employer, is the latest company to hike pay and issue bonuses. what the cash will mean to the economy. powering bitcoin. why a small town in washington has suddenly become the epicenter of the cryptocurrency craze. those stori and more tonight on "nightly busine. good evening, everyone, and welcome. it is a familiar refrain. but it doesn't seem to get old. it was a record day on wall street again today. the major indexes rebounded from yesterday's brief stumble,
extending the new year's rally. today energy shares led the way on a rise in oil prices and a strong start to the earnings season thanks to delta's better than expected results and guidance. the dow jones industriae advanced 205 points to 25,574. nasdaq added 58. and the s&p 500 was up 19, rising on seven of the first eight trading sessions of the year. the world's largest retailer is handing out pay raises. walmart, which is also the nation's largest private employer, will pay workers a starting salary of $11 an hour. employees are also getting a one-time bonus of up to $1,000 depending on how long a worker has been with the company. the ceo says the new tax law is giving the company the opportunity to be more competitive globally. in a statement the company said, quote, today we are building on investments we've been making in associates in their wages and skills development, end quote.
in a separate announcement, walmart is shuttering 63 of its samms clubs locations across the country. seve stores closed abruptly but others will be closed over the next few weeks. the membership warehouse store says the decision was made to better align its locations with its strategy. walmart is not the only company to increase pay and offer bonuses to workers lately. eric chemi is here to discuss that part of the story. eric, how common has this trend been among the top ten, say, private employers in the country, bonuses and pay? >> when you look at this top ten, it's interesting, employers in the country, walmart is the only one that has announced something likethis. that's actually unique, what they're doing. the top ten, those are companies like amazon, home depot, ibm. these real big, giant household names. but walmart is the only one that has a specific plan. the other companies have put out statements talking about the new tax law in general but they haven't actually -- >> and they attributed this move to the new tax law.
>> right. >> you mentioned the fact that they've put out statements, talking about how it might impact their businesses. if you go further than the top ten, what other companies have made a move, if at all, to raise wages? >> that's where it gets really interesting, because you do see companies just outside this top ten like an at&t or a wells fargo or a boeing, and then you start to see a lot of companies that have done wage hikes, one-time bonuses, or corporate investment, for example more employee giving, infrastructure improvements, educa spending, those kinds of things. a lot of different approaches dependin the companies. but not in the top ten. it's all kind of 11 and onward. >> there are a couple of things the interesti her to me. it was not only pay they boosted had of they boosted some benefits, maternal and paternal leave and other things. i have to think that if walmart does this, we'll start to see more of it not just in the second tier companies but in
those top ten. >> you could think so, because a few weeks ago walmart even said, we're running the numbers, we're working on this, and then here we are today with this announcement. there are probably other companies th their numbers and few weeks they'll have an announcement. we have earnings season coming up, maybe companies want to get through that first, then get the pr bump a couple of weeks after earnings with some new announcement like this. >> eric, thanks very much. eric chemi. can rising wages and even those bonuses have a positive impact on the economy? here to discuss that is the chief economist at vining sparks. craig, welcome, thanks for joinus. >> good evening, sue. >> tell me what you think the impact will be, as eric just detailed, walmart is the first in the top ten to do it. but as he also pointed out, there are other companies lower down on the totem pole, if you will, that have b doing that. >> sure. well, i think it's notable that it's walmart. they're the world's largest private employer in the u.s.
they employ 1.5 million people. they've commented that over half of the retail workers will benefit from this increase. and so i think they'll have a big impact on the retail space specifically. as large as they are and how many people they'll affect, number one, it's going to drive up wages for a lot of folks. and secondly, i think it's going to spread to other companies. and i think it really reflects the fact that there is a tight labor market, that they're comp retain their employees. it does reflect the tightness of the labor market and the fact that we'll see a little better wage growth this year, finally. >> i can see a twofold effect here. if more and more companies do what walmart and several others have done, and that is to increase pay to workers, and at the same t you have workers getting more in their paychecks because of reduced withholding, you've got a cash inflow into
the economy that could make growth go up. do you see it that way? if so, by how much? dii do, tyler. we expect to see the consumer drive growth this year. they grodr growth in 2017. taxpayers will save $140 billion we estimate in 2018 from the tax law. and so then with all of these increases, we've seen hundreds of companies that have announced pay raises, there's really going to be a double whammy. and i think that's great news for the consumer. it's good news for the economy. it's good news for the stock market. i think that's one of the reasons we've seen all of these record high closes that you talked about earlier, is because people have been anticipating this coming for a while. the wage growth part is really just the icing on e cake at this point. >> but are there negatives to this? >> there are negatives. i think the most acute negative -- and really, i don't
want to dwell too much on this, because it largely is a very positive development. we haven't seen wage gains of any material amount during this expansion. and so it's nice to see some potential wage gains. the most acute concern would be it becomes inflationary. if you have so much demand for products and services, that you start to see prices rising and inflation starts to rise faster than the fed wants. now, with inflation below their target already, i don't think it's a real huge concern for us. but that is the most acute one. the longer term concern is that the more you raise wages, the more you raise labor costs, the more economic incentive businesses have to replace that labor with automated mechanisms. >> right. >> that will be a longer term challenge. in the short term, net/net, it's a positive element. >> on that note, craig, thank >> thank you. speaking of inflation, a key gauge of inflation fell for the firs in a year and a half. the producer price index
slipped .1 index in december which was below expectations. some economists say the weak report could temper expectations that inflation will accelerate this year. still others believe inflation will pick up. and that could pose a threat to government bond investors be the purchasing power of their fixed interest payments. what's really happening in the bond market and what do investors need to pay attention to? here to talk about that is victoria fernandez. victoria, nice to see you, thanks for joi today. >> my pleasure, sue. >> let's start with what you are watching for in the bond market, as either a caution or a positive. >> sure. i know there's been a lot of headline news that has come out recently and investors sometimes try to chase the market or make changes in the market based on what they're seeing. but really, most fixed is are l investors. this is the time when they need to take a step back, look at the actually holdings in their portfolio, and see if they're
they think is going to happen. if we do think there will be higher rates, if you feel like we're on that trajectory and you think that's going to continue, then you need to make sure you have higher income securities, lower duration securities in your portfolio and that you're not taking on risks that you didn't know you were taking. we're really watching obviously what the central banks are doing, not just here but the ecb as well. we're watching the inflation numbers, the wage numbers that come out. and obviously earnings that started today. that's going to be something to watch in the coming weeks. >> you just said if you think rates are going higher you would want to go to lower duration, maybe some higher yielding products in your funds, in your individual portfolio. but what do you think? do you think rates are going to be markedly higher? and if that is true, what would you do, what would you roll out and roll into? >> sure. so we have had some, you know, individuals come out lately and say they think we're going into a bear market. for bonds, i don't think he
would go that far and say we're doing a bear market. i do think we're going to see rates move higher. there's a lot of support for that. we have really strong equity markets. we have some of t uncertainty that's been priced into the market. that's been removed a little bit. and we have some reduce ed exposure, thecb talking about bringing back their bond buying program. there's support for those levels to an extent. this is a time to just kind of temper your investments, make sure you've got some low volu s put yourself a little shorter where you'll reduce the interest rate risk. >> victoria, we'll leave it there, thank you for joining us tonight. victoria fernandez with crossmark global investment. in a low rate environment like we've had for the past 15, 20 years, investors are drawn to utility stocks because of their
low risk, high yields, and stable revenue streams. but this sector is sensitive to rate changes and any increase could make bonds more attractive to risk averse investors. so if you do have utilities in your portfolio, what should you do? joining us to talk about that is brad macmillan, chief investment officer at commonwealth financial network. brad, i can think of this as a double edged kind of thing. on the one hand, rising interest rates tend to be anathema to utility stocks. on the other hand, a better economy ought to increase their earnings. >> and i think that's exactly right, tyler. the first thing to do here is not panic. at the end of da rat may go up a bit, but the effect is going to be modest. and the effect on you as aed in investor in particular isn't going to matter. if you bought these securities for income, rising rates are not going to hurt your income. in fact if you reinvest it, you'll actually get more income over time. so the first thing here is not
to panic. >> all right. so at this point, then, do you take a look at the utilities you have and see which ones perhaps are more vulnerable to rate increases, as modest as they might be? and maybe sell some of those and add other aspects or other types of utilities >> well, utilities as a whole are indeed vulnerable to rate increases. so if you're really concerned about your capital value, you probably want to start backing off a little bit. but again, there's no need to do that wholesale. cherry pick. look at the companies that you thk are going to benefit least from a faster growing economy. because tyler's point is dead right. second of all, if you're looking at how we're going to reinvest this over time, you probably do want to reinvest the money in those utilities that have higher growth rates in the revenue and in their dividends. it's an all a matter of making
sure you have a rise in utilities. i don't see a massi problem. >> the one thing i try to remind myself, during rising rates, it's been a long doggone time since we've had them, if the dividend isn't cut, you're still getting that same income per share. if you don't sell the bond, you're still getting the payout on that >> that's exactly right. and that's why i make the distinction, if you're buying them for income, your income is solid. in fact your income might even go up. if you're worried about the capital value, then you might want to look at it. but from an income perspective, you're in good shape. >> brad, thanks so much, appreciate it. brad macmillan with commonwealth financial network. up next, the cryptocurrency craze is going full bore in the >> reporter: this is one of the largest bitcoin mining operatio in all the united states. it's in wenatchee, washington state, three hours east of
seattle. dozens of crypto miners are coming to wenatchee. why? they need a lot of power for these servers. i'll expla a day of many moving parts in washington, where a bipartisan group of senators said they had reached an agreement on immigration. the deal would protect undocumented immigrants. but some lawmakers along with the white house say they are not ready to endorse this deal. now, the six senators say their agreement address the so-called dreamers, and border security as well, and family-based so-called chain
immigration. immigration of cour is an issue closely watched by big business. a small town in central washington has become the epicenter of bitcoin mining in the u.s. how did that happen? it all starts with extremely cheap power. michelle carus >> reporter: wenatchee, washington. hours east of seattle and surrounded by beautiful mountains. famous for its scrumptious apples and now famous for somethin. more than a dozen cryptocurrency companies have started ming operations like this one. mining is a process using extremely fast computer servers to solve complex mathematical equati e reward for solving those equations? bitcoin, a new digital currency. >> we have 1,800 servers in this location. they're confirming the network and racing to find the next
group of bitcoins. >> reporter: malachi salcedo is producing five to seven bitcoins per day. he believes the underlying software network of bitcoin, known as blockchain, will become the payment system of the future. >> what businesses is it not going to disrupt? settlements, credit card services, paypal. >> reporter: but to run a mining operation like this one requires a lot of electricity. this requires 7 1/2 megawatts of power, enough to power 11,000 homes. that's why he's in wenatchee, washington, home to a series of dams and the columbia river that provide cheap hydroelectric power. steve wright runs the chelan
county public utility. he says there are currently 12 large bitcoin miners in the area. but with the recent dramatic rise in the price of bitcoin, many more want to come. >> in the last month we've had another 75 c we've gone from just a few people out there who have been on our door to all of a sudden, people banging on the door p just to lay a mile of cable can cost millions of dollars. he doesn't want to put the local taxpayer at risk. >> we don't want people who come here to make a quick buck off our low cost electricity and leave town and leave us holding the bag and leave the people of this community holding the bag. >> reporter: with all the infrastructu you built for them. >> that's right. >> reporter: so they've started demanding cash up front for major infrastructur cost for miners. even though the power is perhaps the cheapest in the entire country, it's still malachi salcedo's biggest cost. >> we currently spend over $100,000 a month just on
electric costs. >> reporter: it's a lot of money. he's convinced it will pay off because he believes in bitcoin. for "nightly business r" m michelle caruso-cabrera, wenatchee, washington. >> a different kind of mine we're looking at there. bitcoin mining could use more electricity this year than argentina, that according to a new report from morgan stanley. the report also estimates that more power from currencies global electrical grids this year than electric vehicles would draw in the next seven years. well, the boom in cryptocurren has newly wealthy investors looking to spend it. and luxury real estate is fast becoming the ticket. that has luxury sellers hoping to cash in on the craze as well. diana olick has our report tonight from >> reporter: dr. wei chen built this five-bedroom beachfront oasis seven years ago.
the malibu home is unlike any other architecturely and dr. chen is unlike most sellers because he's willing to accept bitcoin for part of the $45 million price tag. >> i think we'll attract more international buyers than our country. >> reporte do his neighbors think he's crazy? >> oh, yes. >> reporter: but he thinks he's very logical. >> the whole concept of cryptocurrency is, in my opinion, it's going to be the future. it just depends which one is going to be what we call stabilized in >> reporter: there are not a ton of $45 million buyers. but the boom in cryptocurrency wealth created new ones, especially international buyers. they don't wan to taxed on their gains. so buying with these so far unregulated cryptocurrencies helps them fly under the radar. for luxury sellers, that opens up the pool of potential buyers. >> that's our job in marketing
property, especia luxury real estate, is never assume where the buyer is going to come from, make sure we get this property out there and say, we are open to all currencies and crypto being one of them. >> reporter: so $45 million worth of house. >> u.s. dollars. but also 3,125 bitcoins, as of the last 30 minutes. >> reporter: luxury real estate agent tony giordano has done a few cryptocurrency deals. >> someone will do it if you're not willing to do it. >> reporter: now he travels the country lecturing other agents how to do it. >> i'm trying to teach real estate agents, you better start getting familiar with this. do your research. download a crypto wallet. buy $50 of bitcoin. understand how to buy it and sell it. and start to realize, this is a legitimate currency. >> reporter: but still a highly volatile play in a brick and mortar market.
>> i'm not saying it's safe. i just wt tox take a risk for investment, like everybody else. >> reporter: for "nightly busi" diana olick in malibu. a lot of bitcoin. delta sees clear skies ahead. that's where we begin tonight's market focus. the airline listened its 2018 earnings guidance after it reported better than expected profit and sales. the company said passenger revenue improved in every region, and sai it expects the new tax law to offset higher fuel costs incurred during the quarter. shar took off, rising nearly 5% to $58.52. and pitney bowes is reportedly drawing interest from some buyout if i did, including blackstone and carlisle group. bloomberg says the mail management company has held preliminary talks with those interested and that pitny's ceo is open to a breakup or outright sale. shares of pitney bowes rose 13% to $13.36. buffalo wild wings sees sales for the year coming in
below street expectations. the restaurantd it expects sales to fall 2% but analysts were anticipating a 1.5% decline. shares of amazon rose for the eighth straight day after a pair of wall street firms raised their price target on the stock. ubs is now coming in at $14.4 for amazon, up from $12.50. today amazon climbed 2% to close at $1,276.68. this flu season is packing a punch, coming up. >> reporter: doctors say this could be the worst flu season in nearly a decade. coming up, what's driving it and .
the flu was estimated to co the u.s. economy roughly $10.5 billion annually. that figure doesn't even include lost productivity from sick days. as meg terrell reports, this year's flu season is >> i think i got it on wednesday. >> r flu season is here. and already it appears to be more severe than usual. flu is now widespread in 46 states and hospitals and clinics are seeing a spike in patient visits with flu-like symptoms. a major reason is the strain of the virus that's circulating. it's called h3n2. the centers for disease prevention say reports of the strain increased in december. dr. anthony fauci says it's a more severe strain and the flu
vaccine isn't providing as much protection this year. >> a really good year of protection would be about 60% efficacy. we can't tell for sure right now, but we're estimating that it's going to be significantly less t that. it's going to probably be around 30% for the predominant strains. >> reporter: doctors we've spoken with say this is shaping up to be the worst u.s. flu season since the 2009 swine flu. that puts pressure on emergency departments like this one. >> last year, a busy day in our emergency department wou maybe . every day this week we've been seeing 260, 270, and a major component of that is people with influenza-like symptoms. >> reporter: it's not just the patients. >> when half the staff is out with the flu, it's hard to take care of patients. >> reporter: hospitals are g with spot shortages of iv saline bags, important for delivering medicin and hydrations.
production problem were exacerbated as hurricane maria hit facilities in puerto rico run by baxter, a main suppl [ speaking for] with ers getting overwhelmed, the use of telemedicine is encouraged for those without complications. pati can get the care they need without risking spreading the influence further. meanwhile, work is under way on a better flu shot that could work every year regardless of the strain that is circulating. >> we want to get awaym that intelligent guess game and be much more sure that you can get a vaccine that can protect against virtually any of the flus. that would be what we call the universal inflew influenza.
>> reporter: doctors recommend washing your hands and staying home if you're sick. public health officials still recommend getting the flu shot. meg terrell, "nightly business the dow advanced to 25,574. nasdaq added 58. the s&p 500 was up 19. that means it has risen seven of the first eight trading sessions of this new year. and that will do it for us tonight on nbr. i'm sue herera. thanks for joi us. >> thanks from me as well. i'm tyler mathisen. , absent.
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